Are lead generation sources worth it?

 
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Old 03-13-2010, 02:21 AM   #1
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Are lead generation sources worth it?


Is a lead generation source worth it? Which ones are better for me? What can I expect to pay? I see this asked a lot and figure I may be able to offer some advice here.

First a little about myself, I own a roofing company that started with help of a telemarketing company. I later found room for improvement and made a private marketing company for ourselves to change what I didn't like. We then started offering leads to other companies and have been quiet successful. In the course of our growth we tried every marketing method I think imaginable. NOTE: This is not an ad, just information and opinion from someone who has used these methods and made and analyzed over 5000 leads in the last year.
I will attempt to explain telemarketing leads as best as I can, please realize that any half way decent plan if done enough works, and many of these sources can be very powerful if they match up well with your company.
1) Service Magic, Reliable Remodeler, QS, etc..
What they do –
• These companies spend $$$ to be in the top of all searches, they use PPC, yellow pages ads and more.
• They attract everything from repairs to complete projects.
• They offer every service under the sun (plumbing, electric, dog fences, etc.)
• They promise reputable pre-screened companies and multiple estimates.
How they make $$$ -
• Simple, they take an inbound lead, and sell to multiple companies, so a lead is divided between 3 to possibly 5 companies.
Benefits –
• Put you in front of potential customers.
• Have a large pool of leads and you can pick ones you want and don’t.
• As the name says “service” is the word, if you do repairs these may be much better than for those looking for full projects.
Negatives –
• Entering a price war every appointment, as you are recommended by the same source and supposedly “pre-screened”, the prospects feel that all vendors are the same quality just a matter of price.
• Prospects may not be serious about work, may only be speculating projects.
• Due to price war situation, profit is generally lower.
Is there a difference in these companies –
• Generally not, they do have different advertisement budgets and service, but the concept is basically the same. Look to see who comes up higher in your area of interest on internet searches.
Cost –
• Generally between $30-100 lead ($30-40 is about what this should be worth)
2) Telemarketing Leads
What they do –
• They call areas to find customers looking for work.
• They can be both exclusive to one company or not.
• They usually can be somewhat area specific, zip code is the generic way, but some go down to the street.
• Generally they will call as an extension of your company (Hi I’m calling from YOUR COMPANY)
How they make $$$ -
• By generating appointments for your company and trying to maximize their leads per hour.
Benefits –
• They can be exclusive to you.
• Leads can be better qualified based on your requirements.
• They can usually reach people that may not be receptive to other methods of contact.
• They can add professional perception of your company.
• They can utilize data to help you with your other marketing plans (i.e. If we hear several people say they have damages from a storm in one block and no damage in another, this information can be used to help you see where to canvass or do mailers too.)
Negatives –
• The callers may be losing more business if they do not understand your industry.
• They may set appointments that are un-qualified just to fulfill an order.
• You may need to purchase a minimum to offset the setup charges.
• They may not abide by state telemarketing laws.
• May call from phone numbers that may not be from the area.
• Struggling companies have now shifted to these markets and offer low quality.
• Many companies lack ethics and will resell your data to others.
• Lower priced “companies” may be calling from their cell phones in unprofessional manner that if traced to you can lead you to legal troubles.
Is there a difference –
• Yes, better companies will customize to your requirements and be able to offer consultation of your industry through experience of 1000’s of leads.
• Good companies will have the ability to verify, record calls, and will throw out bad leads to save you wasted gas and time.
• Struggling companies may want you to over commit to leads and be unable to deliver.
• Better companies will work to help you grow and make you a lifelong customer, this is a two-way street, but it becomes a win-win situation when done properly.
Cost –
• Typically between $40-$125 ($55-100 is about what you should expect to pay for a company that doesn’t waste your time and abides by the law.)
Warning Signs –
• A company that doesn’t differentiate price based on area or time of year. The telemarketing business is a LPH (lead per hour) based industry, if it takes me 1 hr to make a lead in Oklahoma and it takes me 3 hours to make a lead in NY, you can’t charge the same for these leads.
• Large down payments, this is usually a bad sign, however not always.
• Low cost – It probably comes with an added price, beware.
Any of these plans can be beneficial, you just need to decide what you are looking for, with the first option choosing a company is generally easy as there are about 3-4 well known sources, with the later be sure to do your research and screen out the bad ones.
Hope that was helpful, I will say that over 5000 leads between our company and our partners we keep feedback on file and the way it works out, and expectations you should have are simple 2 in 10 appts expect to close early, 3 in 10 expect to find unqualified, and 5 in 10 can be turned into deals with proper nurturing and follow-up.

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Old 03-13-2010, 08:02 AM   #2
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Re: Are lead generation sources worth it?


They very best leads come from existing Customers .... Cultivate those and you will grow beyond your wildest dreams ....
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Old 03-13-2010, 09:00 AM   #3
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Re: Are lead generation sources worth it?


If you can be ultra aggressive with the leads calling them back within 2-3 minutes of the lead coming in and meet them the same day or next day, you are going to waste your money with lead services... I used to do real well with QS until the economy took a nose dive and my competitors started giving roofing away for free. What I realy liked about QS vs SM, is simply that they set the appointment and were selling appointments, not leads. When I left SM, I told them the only way I would stay is if they ammend their returns/credits policy and adopt my definition of a lead. They declined, I cancelled.

I never really did well with SM with my company, although in 2000 I built my former employer's company around SM. SM changed for the worse IMO, and then continued to go down hill with every change they implemented. Soon after I left my previous employer, he cut the lead services.

Lead service providers also helped to build up my company, but at a very large cost of about $12,000 per sales rep per year. Which actually isn't bad for the volume of leads we were getting but more than 75% went right into the garbage can, so when you do the math.... OUCh! As of 2009 I am totally free from all lead service providers. I have always had a website. Referrals and past customers aside, the leads that come from my website have always been the best. Therefore I decided to take that $12k per year and redirect it into my website. As of right now my website with no paid sponsorship is keeping me busy part time. I only work part time (3 days a week 10-12 hour days), but am looking to hire another sales rep to work full time. I am totally confident that when I find the right person, I can provide more quality leads than he/she will be able to handle. But I would also like this person to be able to generate their own leads since lead volumes do spike and valley. Having a sales rep that knows how to generate a lead here and a lead there during the valleys is a must IMO.

Then like Ansel said, cultivate your existing customers... but he's got 30+ years in the business, I have 5-6 depending who you ask. I've still got to advertise to build that customer base UP, but do spend time keeping in contact with previous customers. We do alot of repair work, ALOT. Therefore it's only natural that we will likely do multiple repair jobs for the same customer before they are ready to replace the roof, and hopefully when it comes time to repalce the roof we will be the one doing that too (although it doesn't always work that way.)
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Old 03-13-2010, 09:14 AM   #4
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Re: Are lead generation sources worth it?


I shy away from telemarketing... who wants to be distirubed during dinner "hello Mr Smith, we are in your area..." <click> I'm sure it's a numbers game, call 100 people one person will want an estimate, but I don't know if I want people cursing me "ya know, Honey, it's that stupid grumpy's roofing again... When we need a roof there is no way I am calling thos jag bags, they won't stop calling!!!"

However for commercial is another ball game. I entertained the idea 2 years ago about hiring a telemarketing firm but it fell through the cracks being too busy with too many other things and wearing too many hats. Plus I guess I didn't find anyone that really made me say "Wow! These guys have their act together!"
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Old 03-13-2010, 09:37 AM   #5
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Re: Are lead generation sources worth it?


Ansel I do agree with you about cultivating your own customers, but let's face it, this takes time and doesn't pay the bills this month. As for the website and inbound contacts this is truly what wert co
pant should work for, but again this takes time and effort to come full circle. The leads are entry unto a potential prospect today! As for the who wants to be called u do agree, but legit companies develop rules and patterns .. (i.e. Call person no more than 1 time per 24 hrs, after 3rd attempt leave message to an inbound number, and ultimately delete the contact), this is where the big difference comes in between who you hire. We make 1000's of calls each day an have generally 1-2 people upset, everyone else is either unqualified, interested, or polite and say not interested. This has to do with training and management, the $40 makeshift lead source can't give you this service.

Face it, if you just started in the business and need to see opportunities, your website and your customer base will not get you to see 3-5 people tomorrow, this is a development process, higher % telemarketing months 1-3, then taper down, develop other systems, but don't lose it all together, some percentage should come from these sources to build a properly marketed company. You can't say referrals are cheap and easy so that's all we do, you still need some web/tele/canvass/ads etc to make a proper plan for growth and stability.
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Old 03-13-2010, 11:57 PM   #6
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Re: Are lead generation sources worth it?


why not generate your own leads through your website? 10 years ago, you had to be found in the yellow pages. For the most part, the yellow pages are dead today and you must be found on Google. A solid SEO program with a lead generation system on your website is a great way in larger cities to develop new leads.
That and I total agree with Ansel - your best lead generator is a satisfied client.
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Old 03-14-2010, 04:19 AM   #7
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Re: Are lead generation sources worth it?


i agree loyal customers will always be the key in a good buisness, but having family do your telemarketing seems to be working for me.
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Old 03-14-2010, 09:15 AM   #8
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Re: Are lead generation sources worth it?


All paid lead generator systems have a few things in common.
1. They are working for both you and your competition.
2. They sweet talk/scare tactic people/home owners into excepting an estimate even when many times their not ready for or really in need of a new roof.
3. They are only interested in you/your company so long as you are paying them.
4. They re-sell leads during slow times, meaning Mr. Smith who had his roof re-done last June is getting calls this July because XX or OO LG placed them back on the list.
(Which I would hope 4. is found only in the minority of them rather than the majority but I have not found any reports/news stories saying one way or the other.)

You would never hire a sales person who handed you a resume like that.

Remember, no matter how you twist & turn things, once you have excepted/paid for leads from these companies you and your reputation are associated with theirs.
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Old 03-15-2010, 03:03 AM   #9
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Re: Are lead generation sources worth it?


Slyfox, you actually miss my point - many companies are like you state and that's why you should research, an analyze who you use. If a company sells leads to your competition in your area, then you shouldn't use them! This is the ethics that drove me start my own leads dept.

You have to screen these guys, don't go on price or false promise... Look for differences,
references, And also knowledge of your industry. Also do t get stuck paying big deposits or advances, make them earn your business... You should only be buying leads if they work for you, don't get committed to long contracts and deposits.

Appointment setters are like everything else, roofing sales, auto sales, etc ... Their is both good and bad ones out there...

L.
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Old 03-15-2010, 08:44 AM   #10
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Re: Are lead generation sources worth it?


Quote:
Originally Posted by storm-finder View Post
Slyfox, you actually miss my point - many companies are like you state and that's why you should research, an analyze who you use. If a company sells leads to your competition in your area, then you shouldn't use them! This is the ethics that drove me start my own leads dept.

You have to screen these guys, don't go on price or false promise... Look for differences,
references, And also knowledge of your industry. Also do t get stuck paying big deposits or advances, make them earn your business... You should only be buying leads if they work for you, don't get committed to long contracts and deposits.

Appointment setters are like everything else, roofing sales, auto sales, etc ... Their is both good and bad ones out there...

L.
No disrespect intended, I wish you nothing but good luck.

Once you give a company 30 leads and they sale 9, thus your paid for 9 of 30, the other 21 go in the trash?
I doubt it, especially if the home owner contacts you a second time and says, don't you know anyone else in my area?

In the 90's while running numerous crews I boasted a near 60% sales ratio.
That's 6 out of 10 leads sold and well above the national average of 3 out of 10.
Even at that high rate you would be tossing 4 out of 10 potential sales in the trash, unless you had a second, third, etc., contractor in the same area.
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